Your company is evaluating a new factory that will cost $14 million to build. Your target debt-equity ratio is 1. The flotation cost for new equity is 7% and the flotation cost for new debt is 4%. The company is planning to use retained earnings for 50% of the equity financing. What are the weighted average flotation costs as a fraction of the amount invested? What are the flotation costs (in $ million )?

Company T has a debt-to-equity ratio of 0.50. The company is considering a project that will require an initial investment of $54 million. The company's chief financial officer believes that all the investment needed will have to be raised externally. The flotation cost when issuing new equity is estimated to be 6.5% while the cost of issuing new debt is 2.6%. (1) What is the weighted average flotation cost percentage, and (2) by how much does it increase the amount that needs to be raised in order to cover the flotation costs?

) You are asked to estimate the RAROC of a bank's $100 million loan business, 7.5% of which is the economic capital. The average interest rate is 8%. All the loans have the same default probability of 1.5% with a loss given default of 60%. Operating costs are $15 million, and the funding cost of the business is $30 million. The economic capital is invested and earns 6%.

If Campbell were to purchase a new warehouse for 1.1 million and finance it entirely with long-term debt, what would be the firm's new debt ratio?  The new debt ratio will be account payable 495,000 notes payable 243,000 current liabilities 738,000 long term debt 1,207,000 common equity 5,079,000  total liabilities and equity 7,024,000

Suppose you borrow $1,000,000 when financing a coffee shop which is valued at $1,300,000. You expect to generate a cash flow of $1,400,000 at the end of the year. The cost of debt is 5.5%. What is the cost of equity? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05

Speckle Delivery Systems can buy a piece of equipment that is anticipated to provide an 8% return and can be financed at 5% with debt.  Later in the year, the company turns down an opportunity to buy a new machine that would yield a 15% return but would cost 17% to finance through common equity.  Assume debt and common equity each represent 50% of the company’s capital structure.   Compute the weighted average cost of capital (WACC). Which product(s) should be accepted in your opinion? Why?

If Jefferson Inc. purchases a building that increases fixed assets by $27,588 and they did this with 40% debt. What is the dollar amount that total equity will increase by?

CCR Incorporated is considering a new project. The company has a debt-equity ratio of .62. The company’s cost of equity is 11.8%, and the after tax cost of debt is 4.9%. What is the WACC for CCR?

A firm that is currently unlevered has WACC = rS = 10%/year. This company plans to do a recapitalization by issuing debt and repurchasing equity. After the recapitalization, the debt-to-equity (D/E) ratio will be 0.5. If the cost of debt, rD, is 6%, what will be rS after the recapitalization?

You are given the following information concerning a firm:Assets required for operation: $5,100,000Revenues: $8,400,000Operating expenses: $7,850,000Income tax rate: 40%. Management faces three possible combinations of financing: 100% equity financing 30% debt financing with a 8% interest rate 60% debt financing with a 8% interest rate   What is the net income for each combination of debt and equity financing? Round your answers to the nearest dollar.     1 2 3 Net income $     $     $       What is the return on equity for each combination of debt and equity financing? Round your answers to one decimal place.     1 2 3 Return on equity   %     %     %     If the interest rate had been 16 percent instead of 8 percent, what would be the return on equity for each combination of debt and equity financing? Round your answers to one decimal place.     1 2 3 Return on equity   %     %     %     What is the implication of the use of financial leverage…